Francis' Silicon Valley Real Estate corner...

Friday, February 27, 2015

California is in a deep drought, as evidenced on this map of the state of drought in the US, from the NIDIS web site (National Integrated Drought Information System). It is not going to go away. Knowing where we waste water is useful:

Wednesday, February 18, 2015

Thinking about owning a home one of these days, even if it
is not going to be very soon?

A good way to start is of course to talk to a Realtor® (not
just a real estate agent).A Realtor® is
a member of the National Association of Realtors®; he adheres to a very strict
code of ethics. Not all agents are Realtors®!

Some of us however like to do some research first,
investigate and read about a subject, and be comfortable before making a
move.

A very good place to start, which is not very well known, is
the Consumer Financial Protection Bureau which was created right after the 2008
financial meltdown.Their “Owning a Home” page is
really comprehensive, full of essential information about the whole process. It touches on the financial aspect of the
journey to owning a home (loan options, rates etc…) to the actual procedures of
closing such a transaction.By the way,
these procedures include new documents and disclosuresthat will be taking effect on August 1 of
2015.The old closing documents and
forms will be shelved.

In the financial part, you will see that no one can quote
you a rate right off the bat, without knowing a good deal about your personal
situation.So, when you read about that
fabulous rate in the paper or in an ad, you’d better be careful, - it is
probably for the cleanest, richest, ideal top-credit-rating person My advice
is rather to choose a loan agent whom you know will look out for the best
loan for you when the time comes (not necessarily the cheapest).You will also see that depending on the type
of loan, you can borrow more or less…that walked
on the surface of this earth.

As far as the details on the procedures, paperwork, customs
and uses, and the most efficient ways to go about doing your search and
purchase, I’d go back to your Realtor® of choice - the one whom you
know will look out for your best interest.

Thursday, February 5, 2015

A lot has been
said and written on the subject of properties selling “off MLS”, meaning they
have not been on the Realtors’ Multiple Listing Service and were sold before
making it to that database, common to all Realtors.

Coming from a
country where a common database of properties for sale is
nearly non-existent, I can definitely vouch for the huge benefits that such
a common database offers, both to buyers and to sellers. We
could go on and on describing those benefits, but let’s just say that it pretty
much ensures that a property for sale, by virtue of being exposed to all the
agents around, will sell for its real, highest market value (low, high, but the
most accurate result of supply and demand). Also, a buyer will find
all that is available for sale in one place, which means more choice and less
wasted time going from one provider of information to another provider of information.

So, why sell a
property “off MLS”? There are some unique situations where the
sellers do not want the whole public to know that they are selling, and that is
understandable. There will always be special circumstances (i.e.
very high price range, specific sellers’ needs or preferences,
etc..). But these exceptions aside, I see mostly downsides to not
offering a property for sale through the MLS:

-Less information for buyers and sellers about current sales
activity, and "comparables". How do you price a property if you don’t
know how, and how much similar homes sold for? This information is easily
accessible (and reliable!) in the MLS.

-A situation where both the seller and the buyer are “gambling”;
one gambles that he/she bought for a lower price than if the house had been
offered to all potential buyers, the other one gambles that he/she sold for the
best, highest price.

-A lack of confidence by the clients-buyers that they are being
treated fairly: after looking for a home for several months and missing out on
several offers, a buyer is not happy to learn that “that” house was for sale,
but (s)he did not know about it,

-The creation of smaller entities, or “channels”, where such
properties are “known” or “available” to select agents and their clients;
again, this is going back to a system without a reliable common database for
all, and in my opinion does not serve the public well. Indeed, even those agents may be unaware of some other offerings in a different channel,
and their clients will miss out on those opportunities.

The practice of
selling real estate through an MLS is not perfect, but it is the result
of an evolution, and it is immensely practical and fair, and someone coming
from a system where it does not exist sees it right away. As an
agent, I keep close tabs on all channels showing properties available for sale,
even “off MLS”. But using “alternative
channels” excessively undermines the MLS, and I am afraid this will
make it more difficult and unpredictable for the public to find or sell
real estate – and a lot less efficient.Let me know what you
think!Thanks for reading,

Thursday, January 15, 2015

Up until the end of 2014, property sales prices could be withheld from public records.

If someone selling a property did not want the sales price to be disclosed, they just instructed the escrow officer to show the transfer tax amount on a separate page from the Grant Deed (the Grant Deed is public record).

Since January 1 of 2015, this is not going to be possible any longer: the hidden tax form will no longer be accepted by the County Recorder, regardless of when the documents were executed. The tax amount will have to be shown on the Deed.

What newspapers do when they publish the recent real estate activity is this: they calculate the sales price from the Transfer Tax (when shown on the public document), and show the final sales price. So from now on, it will not be possible to hide the sales price...

Tuesday, January 6, 2015

The number of properties available for sale is always
smaller around the first of the year, and the market less active as the
Holidays take people to other places, both in their minds and physically.

This year for the area covering the five cities of Los Altos,
Los Altos Hills, Mountain View, Palo Alto and Menlo Park, we start the year
with a total inventory of homes for sale of 37 (24 of those are over $2
million). This total includes houses,
and condominiums/townhouses.

As a comparison, last year we started with a total of 51
properties. This, coupled with the huge activity
I see at open houses, indicates that for a foreseeable future there is a large
imbalance between the number of buyers and the number of sellers.

For the area covering the whole County of Santa Clara, we
start the year with a total number of properties for sale at: 606… Last year, we had 751 homes for sale at the
beginning of the year. Even though many
areas are not as extreme as around Los Altos and Palo Alto, we still see a strong
sellers’ market out here, especially in the entry-level / lower price range.

My monthly market update, accessible in a detailed form on my local newsletter, shows
that the average ratio of sales price
over list price is lower towards the end of the year (this graph is for the
County of Santa Clara):

These are two facets of the local market around the New
Year: statistically, properties sell for less of a premium, but the fact is that it is still a very strong sellers’ market. Many clients ask me why and the answer is not
straightforward. I think that it
reflects on the fact that over large numbers, statistically, there may be more
properties on the market that must sell, as compared with the rest
of the year. It may also reflect on the
fact that the quality of the real estate offerings is lower, and/or there are fewer buyers looking. Remember, these are statistics. However what it does not mean is that a
desirable property, in a desirable area (schools, prime location etc…) will
sell for less, if there is not a “time pressure” factor involved.

Tuesday, December 30, 2014

Year-in year-out Realtors in the Bay Area deal quite a bit with
foreign buyers. It is interesting to keep some perspective on this
phenomenon at the national level.

From March 2013 to March 2014, foreign purchases in US real
estate increased 26% from the year before, to a total of $92.2 billion
(National Association of Realtors Profile of International Home Buying
Activity).

4 states accounted for 55% of the total: Florida,
California, Arizona and Texas.

Nearly 60% of reported international transactions were all cash,
compared to just one-third of domestic home purchases. - Still 1/3 is an impressive number!

54% of all international transactions last year came from Canada,
China, Mexico, India and the U.K.
Clearly, the United States remain a destination of choice for investors for its
stability, and future prospects.

Separately, but still relevant to this subject, it is good to note that the foreign-born population by state looks like this:
- California: 25.4%
- New York: 10.8%
- Texas: 10.4%
- Florida: 9.2%
- the rest (~44% ) is divided between the other states.

-Set up alerts, do not be late.Set up email and text alerts, as well as auto-pay,
to help ensure that you pay your bills on time and build positive credit
history.The first missed payment has
the largest impact on a credit score, so don’t miss payments. If you are late,
don't be 30 days late, and if you have difficulty, call your lender - often
time they can work with you.

-Do not do charge anything unusual on your credit
card - no cars, no motorcycles - do not increase your debt ratio as you are trying to get a new loan.

-

Beware of moving debt. Be wary of moving around debt repeatedly - you need to pay debt down to improve your credit score. Also beware of moving large amounts of money during the loan process, unless you can document it thoroughly.

-Know your debt-to-income ratio.Lenders look at the amount of debt you have
compared to your monthly income - it’s
good to keep that under 35%.

- Good scores = Good rates:better credit scores in most cases get you better credit
interest rates.

-Don’t open too many accounts: opening up a bunch of
credit accounts you don't need may negatively impact your credit score.

-Keep balances low:keep
balances low on credit cards and other revolving accounts - this may help your credit score.

-Think before closing accounts.Closing credit card accounts may lower your
available credit and could hurt your credit score in the short term.

-Length of your history matters.Lenders care about the length of your credit history
because they want to see that you can manage credit accounts responsibly over
time.

I always tell me clients: when it is time to apply for a loan, follow
closely the instructions of you loan agent, and in doubt: ask the
question.They know best what the
underwriter is going to scrutinize, what works and what does not work.

Monday, November 17, 2014

Sellers may be in a situation where they receive what they think is an acceptable offer, one that they wish to work with, and then proceed to counter that offer. What happens if, prior to acceptance by the buyers, the sellers get another better offer. Are the sellers trapped?

No, the sellers may revoke that counteroffer, as long as it is done in due time. The definition of "due time" and "properly done" can get technical, and a little too involved for this current blog. If it is not explained carefully by your agent, and if it is not carefully documented, it can be a costly matter.

But the reason for this blog is not to explain the above, it is to stress that many buyers, (improperly informed by their agent), think they can take their time to respond up to the expiration of the time stated on the counteroffer. That period of time however can be cut short by a seller's revocation of their counteroffer prior to the buyers' acceptance and delivery.

Buyers should be aware that the clock is ticking on their response from the time they have received the counter offer, and that they may not have until the expiration to respond. Buyers who are eager should, therefore, get their response back to the seller as soon as possible after they have received a counter offer - before any revocation can occur.

Hot markets create situations that agents do not usually encounter in slower markets. It is important to have a knowledgeable agent on your side to keep you informed of your options, and pitfalls to avoid. The decision is always the clients' to make in the end, but it is important to understand the rules of the game - and I prefer to say, it is important to precisely understand the language of the counteroffer that is given to you. This is where your agent can save you a lot.